How Active Is Your Mutual Fund?

How Active Is Your Mutual Fund?

By now most people know that if you want your investments to track the market, you are better off investing in passive index funds and saving money on fees. That doesn’t mean that actively managed funds are always a worse choice, but they have to beat the market by at least the difference in fees for you to come out ahead. Which raises the question, how do you know if an actively managed fund is really out there looking for opportunities or just riding the bull market and pocketing fees?

“One of the best ways to measure how closely a fund's holdings mirror those of its benchmark index is to look at a metric called...